# What is Section 83(b) Tax Election? Definition & Technical Mechanics

> **Source:** [SPIDITS AI Startup & Venture Intelligence Glossary](https://spidits.com/startup-glossary)  
> **Category:** Legal  
> **Canonical Citation:** [https://spidits.com/startup-glossary/section-83b-election](https://spidits.com/startup-glossary/section-83b-election)

## Definition
Section 83(b) Tax Election is a US tax provision allowing startup founders and early employees to pay capital gains taxes on the fair market value of equity at the time of grant rather than when shares vest over time.

## Architectural Mechanics & Deep Dive
Section 83(b) Tax Election is a US tax provision allowing startup founders and early employees to pay capital gains taxes on the fair market value of equity at the time of grant rather than when shares vest over time.

## Industry Applications & Real-World Use Cases
Startup founder equity vesting setups, early employee stock options, and long-term capital gains optimization.

## Frequently Asked Questions

### What is the deadline for filing a Section 83(b) election?
The IRS strictly requires filing the Section 83(b) election form within 30 days of receiving restricted stock or equity grants.

### Why is Section 83(b) vital for early startup founders?
If an 83(b) election is not filed and the startup valuation rises significantly over 4 years, vesting shares trigger massive ordinary income tax burdens at vesting without any liquid cash to pay them.

## Related Terminology
- [qsbs](https://spidits.com/startup-glossary/qsbs)
- [vesting](https://spidits.com/startup-glossary/vesting)
- [capital-gains-tax](https://spidits.com/startup-glossary/capital-gains-tax)

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*From the SPIDITS AI Knowledge Base (311+ terms indexed). Explore full technical definitions: [https://spidits.com/startup-glossary](https://spidits.com/startup-glossary)*